Should You Buy A Fixer Upper? How Should You Budget

By
Real Estate Agent with Keller Williams Capital Properties DC AB15253

Everyone seems to be watching all the HGTV shows about flipping homes or renovating them into your dream home.  It is hard not to see yourself doing the same thing!  After all, it seems so easy!  Why not? 

If you are falling in love with the idea of renovating a home to reflect your personal style and saving money with sweat equity, that can be a great plan.  You can increase the value of your new home and get exactly what you want.  However, you also may encounter some unanticipated problems after the renovations begin.  That may bump you over your budget, even if you are doing the work yourself.  Before you begin your next remodeling project, you should think carefully about what you want and be prepared for the unexpected.

GET DETAILED ESTIMATES

 

When planning a remodeling project, get quotes from several experienced local contractors. It’s important to be clear about what you want the end result to look like when finished. Be specific about the types of materials you want to use—and anything you don’t want—as this will allow contractors to provide estimates that reflect what you actually want, rather than their guesses and assumptions. When you look at all the estimates, you’ll be comparing apples to apples, making it easier to choose the one with the best price.

BE PREPARED FOR SURPRISES

Home remodeling projects often uncover additional problems, especially in older houses, so you need to be realistic. The contractor may discover dry rot, damaged insulation, mold or other issues that’ll need to be fixed before proceeding with the renovation. Be sure to tack 15 to 20 percent onto your budget just in case something unexpected comes up.

BUDGET FOR YOUR PLAN

Once the remodeling process begins, you may be so excited about the changes you’re seeing that you think of other things you’d like to do. You might even start to think about remodeling another room since the contractor is already present and you could get both projects done at once. While it may be fun to think about the possibilities, this is a surefire way to go over your budget.

STICK TO THE PLAN

 

Once you make a plan and set a budget, stick to it as much as possible. Be realistic about what you can afford. Don’t take the lowest estimate and assume that everything will go according to plan, as there’s a very real possibility that it won’t. No matter the project, it’s important to be prepared for unforeseen expenses. If you don’t have enough money to complete your remodeling project the way you want while factoring in enough to cover problems that might arise, consider postponing the project until you can save more money. It might be inconvenient to continue living with an outdated kitchen or bathroom for a few more months, but you could avoid major financial problems by putting off the remodel until you’re sure you can afford it.

 

BOTTOM LINE

If you are thinking of buying a home to renovate, lets have coffee and talk about the steps that we should be taking together.  We can also explore different types of financing, such as an FHA 203k loan, that will make the cash flow easier for you!  Lets talk!  Call me at 240-401-5577 or email me at lise@lisehowe.com.

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. M.C. Dwyer 12/07/2018 03:47 PM
Topic:
Home Improvement
Tags:
203k loans
renovation loans
lise howe group

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Rainmaker
1,696,337
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Good afternoon Lise - you really need to know.  Those TV shows make it look easier than it is.

Dec 06, 2018 11:10 AM #1
Rainmaker
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Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

Some people like doing that work and put in their own touch on things and others think it’s a form of torture. People should know what kind of person they are before they jump in headfirst, you know? :)

Dec 06, 2018 11:41 AM #2
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Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

It takes a firm commitment & capital to have success flipping houses. I've got a couple of rentals but they were pretty much turn-key when I purchased them.

Dec 06, 2018 11:48 AM #3
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Kathy Streib
Room Service Home Staging - Delray Beach, FL
Home Stager - Palm Beach County,FL -561-914-6224

Hi Lise- the shows do make it look easy but I've watched some of the flipping shows and the "Be prepared for surprises" is key. I worked with a flipper and the agent and I tried to discourage him from putting all of the extras that he would like in a home. We had to keep reminding him that he was not going to be living in it but he wouldn't listen. 

Dec 06, 2018 06:34 PM #4
Rainmaker
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Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

I love the post. I hope home buyers will read this post and learn 

Dec 07, 2018 02:48 AM #5
Rainmaker
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Nina Hollander
Coldwell Banker Residential Brokerage | Charlotte, NC - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

Great suggestions, Lise. One thing I do know is that most everyone I know who did a fixer-upper ended up spending more than they ever thought they would.

Dec 07, 2018 04:10 AM #6
Rainmaker
1,593,627
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker and Attorney Licensed in DC, MD, VA,

Nina Hollander - it can definitely sneak up on you - and then your budget is blown

Dec 07, 2018 04:20 AM #7
Rainmaker
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Patricia Feager, MBA, CRS, GRI,MRP
DFW FINE PROPERTIES - Southlake, TX
Selling Homes Changing Lives

Lise Howe - If those shows were really honest with people, the renovation and remodeling projects they talk about on T.V. would far exceed the number of hours it took to create Gone With The Wind. There would be battles, money problems, alternate plans, differences of opinion, making appointments with planning and zoning, lining up the right contractors, and so much more that just a great idea. When you think about what it takes an Architect to graduate and get out into the field and being successful, knowing and understanding building technology, construction, plumbing, location, land, sizing, shaping, designing, ordering materials, paying for costs, dealing with back-orders, zoning, permits, etc., it sure takes a lot education, time, patience, problem solving, and money. And let's not forget, while all that is going on, babies could be born, people can lose their jobs, kids grow up, family commitments, sickness, graduations, vacations, weather changes, etc., 

Dec 07, 2018 04:40 AM #8
Rainmaker
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M.C. Dwyer
Century 21 Showcase REALTORs - Felton, CA
Santa Cruz Mountains Property Specialist

Congrats on the feature Lise Howe    I watch those shows and it does look intriguing but so much risk and work!     Especially enjoy DIY's First time flipper 

because they show the ugly side of it and the roller coaster ride for the newbies.

I'd love to reblog, and it looks like you've okay'ed us reblogging - just confirming with you?

Dec 07, 2018 03:44 PM #9
Rainmaker
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Roy Kelley
Realty Group Referrals - Gaithersburg, MD
Roy and Dolores Kelley Photographs

This is very good advice to share with prospective home buyers.

Dec 08, 2018 06:11 AM #10
Rainmaker
1,900,786
Andrew Mooers | 207.532.6573
MOOERS REALTY - Houlton, ME
Northern Maine Real Estate-Aroostook County Broker

Good luck with the handyman special... especially if expecting the needs TLC dirty but nice house to make it over picking mortgage loan underwriting hurdles. Cash is king and if you can score owner financing it is a bonus to your fix, flip, buy another one. To do it again.

Dec 08, 2018 06:49 AM #11
Rainmaker
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Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Experienced Agent in Kansas City Metro area

Good advice!   Renovation always seems to take longer than expected and cost more than budgeted!

Dec 10, 2018 08:09 AM #12
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Lise Howe

Assoc. Broker and Attorney Licensed in DC, MD, VA,
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